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Editor Dan Schimmel, LCSW, CAP
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Scamming Government out of Millions of Medicaid Dollars

medicaid-rehabDespite the fact that there are hundreds upon hundreds of legitimate rehab facilities located throughout the United States, there are quite a few “organizations” that are more interested in bilking the government, more specifically the Medicaid system, out of money.

These rehab facilities are not the same as those that are truly interested in helping those who need assistance beating an addiction. Instead, the clinics continually look for ways to scam the government and taxpayers into paying them for drug and alcohol counseling.

From the outside, these clinics appear to be doing things the right way. However, as you dig deeper into their business practice you will find that nothing could be further from the truth.

Fortunately for everybody involved, ranging from legitimate rehab centers to the United States government, these so-called clinics are being exploited.

For a closer look at growing fraud in the state of California, CNN and the Center for Investigative Reporting conducted a yearlong investigation into this growing problem.

A Growing Concern

During its investigation, CNN and the Center for Investigative Reporting took aim at Able Family Support, a clinic located in the San Fernando Valley.

Those looking at the clinic from afar will have a difficult time finding anything wrong. In fact, it appears that the organization truly cares about helping those who need addiction treatment but do not have the means necessary to pay for assistance.

Here is the problem: the clinic is reimbursed by taxpayers for each client it services for in-person drug and alcohol counseling. In other words, the more people who walk through the front door the more money the clinic is going to generate.

This doesn’t sound too bad. After all, every business does its best to generate as much traffic as possible. This holds true with almost every company, regardless of industry.

On what appeared to be an average day in April, Able Family Support went about doing its business as usual. What the clinic did not know was that reporters had set up shop in parked cars, counting the number of people who came and went that day. When everything was said and done, no more than 30 patients stopped by the rehab facility.

If the clinic had submitted its bill to Los Angeles County for the exact number of patients treated, there would not have been any issue. But this isn’t how things played out.

Instead, when the bill was submitted to Los Angeles County for reimbursement, it was for 179 people or roughly 150 more than the actual number.

In no time at all, the government paid Able Family Support $6,400 for assisting these people.

As you can see, these clinics are able to lie about the number of patients treated as a means of collecting additional money.

Big Time Pay Outs

CNN and the Center for Investigative Reporting have done an excellent job uncovering this racket, making it known to the world that there are clinics out there collecting hundreds of thousands of dollars that they are not entitled to.

After interviewing everybody from counselors to patients to regulators, it is easy to see that California’s Medicaid system, the largest in the United States, has been scammed out of millions of dollars.

Take this statistic for instance: over the past two fiscal years, the Drug Medi-Cal treatment program has paid out $94 million to 56 clinics in Southern California.

This number alone is enough to make you wonder what is going on. Even more so, these 56 clinics have shown signs of questionable billing and deception.

More than half a billion dollars have been pushed into the program in California, but it was not until recently that this scam was truly brought to light.

At this point, many are wondering how the government program, which is meant to help the addicted and poor, can be adjusted to avoid the same issues in the future.

The current honor system, in which the government expects clinics to be honest with how many patients are being treated, is no longer an option. Along with this, there are concerns about the number of random inspections being made as well as the process of addressing any issues should they be uncovered.

Where is the Government?

At this point, it is easy to believe that government officials are doing nothing to solve this problem. This is not exactly true. Here is the issue: those who have attempted to uncover fraud and find a solution run into weak regulations and corruption within their own organization.

Did you know that clinics, even those that have been proven to be breaking the law, are rarely shut down? The report by CNN and the Center for Investigative Reporting pinpointed 12 clinics caught scamming the system only to remain in business. Even more disappointing is the fact that these clinics were rewarded with additional public funds.

What Now?

Los Angeles County regulators were recently informed of the information dug up in the recent CNN investigation. As a result, county regulators said they are concerned about whether or not they made legitimate payments.

Alexander Ferdman, the clinic’s director, was reached via telephone and only shared the following before hanging up:

“I can’t explain, because you will cut and paste and edit, and my answers will be to a totally different question.”

This study took aim at one county within one state. Can you imagine how bad the numbers would look if every clinic in every state was examined more closely? This would likely uncover similar scams, all of which are costing government programs and taxpayers millions of dollars every year.

CNN and the Center for Investigative Reporting has brought this growing problem to light, showing how clinics use fraudulent acts to defraud taxpayer-funded programs meant to treat patients dealing with drug and/or alcohol addiction. Even more so, the report shows that clinics are not just taking advantage of the system but instead using it as a means of generating millions of dollars in revenue.

As rehab clinics continue to scam these programs out of millions, it is the patients, taxpayers, and legitimate facilities that suffer the most.

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